Why Decentralization Is So Important » Crypto Insiders

As a result of the Russian invasion of Ukraine, the Russian people are being taught a harsh lesson about the importance of decentralization. By this I mean decentralization in the context of assetsNot when it comes to decentralization of power in general, which would also benefit Russia. Coinbase blocked 25,000 Russian accounts in response to the Ukraine invasion, and OpenSea and Metamask also cut off Russians from their services.

For many people, this news probably came like a bolt of lightning. Coinbase, OpenSea, and Metamask are trading platforms for decentralized assets, right? Everything that happens here is off limits to the poor people in government, isn’t it? Decentralization is a word that gets stuck in all the hype around cryptocurrencies, decentralized finance (DeFi), and non-fungible tokens (NFTs). Virtually no one knows what it means anymore, but everything labeled crypto is also decentralized according to most people.

Altcoins have nothing to do with decentralization

Decentralization is something that is sticking everywhere these days, slowly but surely losing its meaning. Decentralization simply means something that has no center. If there is such a thing as a hub to designate for a project, you can assume it is anything but decentralized. Take for example Ethereum (ETH) which hard fork after hard fork and even has a roadmap for this. In theory, it is a decentralized project, but in practice it is not like that at all.

The only coin on the market that I think still has a pure spirit of decentralization is still bitcoin (BTC). Ask the average Ethereum follower if they have a full node running and the answer is probably no. Ask a bitcoin maximalist the same question and they will most likely say yes.

Most altcoiners hold their assets with exchanges or use Metamask or OpenSea to ‘protect’ their ‘decentralized’ assets. This is also exactly why I am convinced that Ethereum and the rest of the altcoins are doomed. People are only in it for the money and have no idea what decentralization really means and why it matters. Pretty much everyone who understands that they have most of their wealth in bitcoin and can gamble a bit with altcoins.

What makes Bitcoin special?

The only reason Bitcoin has any chance of success in the financial world is because it is actually decentralized. Bitcoin is the only currency on earth where you know that 1 bitcoin is always 1/21,000,000th of the total supply forms The good thing is that you don’t have to trust anyone for this. As long as you run your own full node with the rules you accept, nobody can change anything about bitcoin.

This is different with an Ethereum where most people hold their assets with centralized parties. They have no idea what is happening on the blockchain and expect Vitalik and his friends to take care of everything. Basically, Ethereum and the rest of the altcoin industry are nothing more than companies trying to promote “decentralized” financial products.

The applications that everyone is excited about right now are DeFi and NFT. With the most popular DeFi apps, you can now borrow other cryptocurrencies, lend your assets, and exchange digital tokens against cryptocurrencies as collateral. Nothing in the DeFi world touches the real world. To trade shares, you always need a centralized party that designates certain pieces as shares. In my opinion, NFTs are pure speculation, hardly anyone buys such ‘art’ to own it. Profit is the only motivation here.

That is the big difference between Bitcoin and the rest. Bitcoin is actually building a decentralized system while altcoins are all about profit. The funny thing is that profit will eventually end with bitcoin, that’s my personal belief.

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